Performance, Commentary & Portfolio
ISIN GB00BNG2M159 | SEDOL BNG2M15
Fund Manager’s Review
Portfolio Overview
Allianz Technology Trust’s Net Asset Value (NAV) total return was 4.16% in October compared to the Dow Jones World Technology Index return of 3.50%.
Technology shares were higher in pound terms, thanks to gains in communications equipment and semiconductors, while the electronic equipment industry declined and IT services stocks were essentially flat.
Monthly relative results outpaced the benchmark thanks primarily to bottom-up stock selection. Software was the top relative contributor from an industry perspective, followed by gains in IT services and a below-benchmark allocation to technology hardware. Meanwhile, more conservative short-term stock selection in semiconductors offset performance for the month.
Contributors
Our active underweight allocation to Microsoft Corp., a worldwide leader in software, cloud storage and security solutions, led to relative results as the company announced earnings which pointed to outsized growth in their Azure Unite service. This was offset by a lower forward guidance amid capacity impacts and moderating growth headwinds.
Our above-benchmark allocation to big data and analytics platform Palantir Technologies Inc. contributed to performance thanks to continued momentum in their products and services, with increased use of hyperscale cloud infrastructure for artificial intelligence (AI) training and inferencing workloads
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The potential impact from additional central bank rate cuts and the clarity from the U.S. Presidential election are likely to further accelerate investor sentiment toward the asset class |
Shares of Datadog, Inc. a cloud-based monitoring and analytics platform, advanced due to a rebound in software stocks and increasingly constructive sell-side expectations pointing to the company’s robust growth outlook and sustainable competitive advantages.
Our active overweight allocation to software and security solutions developer Cloudflare Inc. contributed to results as did our structural below-benchmark allocation to iPhone and personal computer maker Apple Inc.
Detractors
Shares of Monolithic Power Systems, Inc., a provider of semiconductorbased power electronic solutions, were lower following earnings results at the end of the month despite a “beat-and-raise”, as investors were looking for a greater acceleration in their enterprise data segment. We continue to hold the stock given its leadership position and secular growth expectations.
Our structural below-benchmark allocation, given our maximum position size limitations, to graphics processing and related networking leader NVIDIA Corp. offset performance given the stock’s significant benchmark weight combined with a double-digit gain driven by continued excitement over AI-related applications.
An active underweight to search engine, infrastructure and data analytics application leader Alphabet Inc. detracted from monthly performance as the company topped sales estimates thanks to strength in their cloud computing business. We continue to own the stock at a below-benchmark weight given our preference for companies with better growth profiles and more tangible near-term catalysts.
Our active overweight allocations to semiconductor makers KLA Corp. and Advanced Micro Devices, Inc. also detracted from results due to short-term industry performance.
New buys and sells
Turnover in October was at a lower-than-typical level as the Portfolio was already well-positioned from a bottom-up and thematic perspective. We newly purchased shares of database and infrastructure software developer MongoDB Inc., after having owned the stock in the past, given our viewpoint that expectations have been reset and the company is likely to benefit from growth in AI and cloud-related applications. We made the decision to sell our stake in ride hailing and delivery platform Uber Technologies Inc. at the end of the month due to expectations that competition may increase, and the company’s near-term fundamental factors were already fully reflected in the current share price. There were no other portfolio buys or sales during the month.
Outlook
The outlook for technology companies continues to look increasingly attractive thanks to expectations of continued outsized growth relative to other segments of the market, coupled with a reasonable valuation level relative to history. The potential impact from additional central bank rate cuts and the clarity from the U.S. Presidential election are likely to further accelerate investor sentiment toward the asset class. Our expectation is that merger and acquisition activity may continue to rise as capital markets continue to show signs of strength, which bodes well for companies further down the market cap spectrum. Amid any potential volatility, we are opportunistically looking to upgrade select names and add to our highest conviction ideas to better position the portfolio for improved performance.
Our focus remains on building the portfolio from a bottom-up perspective with a macro-overview. Technology remains a key enabler across almost every vertical industry and we will continue to seek stocks which solve difficult problems and can be long-term outperformers. Despite shortterm periods of higher volatility, earnings growth ultimately drives stock prices over the long term and in our view, we are still early in the spending trend supporting this dynamic segment.
Mike Seidenberg
8 November 2024
This is no recommendation or solicitation to buy or sell any particular security. Any security mentioned above will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date.
1.Calculated as 10% of outperformance against the benchmark, after adjusting for changes in share capital and will be capped at 1.75% of the Company’s average daily NAV over the relevant year.
2. As at the Trust’s Financial Year End (31.12.2022). Ongoing Charges (previously Total Expense Ratios) are published annually to show operational expenses, which include the annual management fee, incurred in the running of the company but excluding financing costs.
Registrations |
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Company No. |
03117355 |
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FATCA GIIN No. |
YSYR74.99999.SL.826 |
Codes |
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RIC |
ATT.L |
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SEDOL |
BNG2M15 |
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ISIN |
GB00BNG2M159 |
Awards & Ratings
Investment Week Investment Company of the Year Award 2021 – Specialist category
Allianz Technology Trust won this coveted award in November 2021, having also been a winner in similar categories in 2020, 2019, 2018, 2017 and 2015. This award recognises excellence in closed-ended fund management and highlights ATT’s consistent performance over time. The judging panel was made up of some of the UK’s leading researchers and investors in investment trusts and closed-ended companies, as well as several senior board members with many years’ experience in the industry.
Association of Investment Companies Shareholder Communication Awards 2021
Allianz Technology Trust won the Best Large Trust category, in recognition of its consistent, high achievement. The publication noted that ATT achieved the highest returns among this year’s award-winners (performance measured over three years to 31 January 2020), calling it “a worthy winner of our most prestigious sector award”. This accolade is an independent, statistical and qualitative assessment of ATT’s performance and highlights the Trust’s outperformance both in its class and against its peers.
Shares Awards 2020 – Best Investment Trust
Allianz Technology Trust was pleased to win ‘Best Investment Trust’ in The Shares Awards 2020. The awards were voted by readers of Shares and by the general public, making the award truly representative of the people who invest in the Trust and its peers. In presenting the award, Shares Magazine noted: “The technology sector had been in the ascendancy even before the events of 2020 but the global pandemic has super-charged this trend. We have been even more reliant on tech to tackle the day-to basics of work and home life. Staying in touch through video conferencing, ordering goods and food online and streaming entertainment to keep us entertained at home. Allianz Technology Trust is plugged into these themes and was voted Best Investment Trust in this year’s Shares Awards.”.
Kepler Growth Rating
Kepler Ratings are designed with investment trusts specifically in mind and aim to highlight those which they consider to be ‘best in class’ based on a clear, easy to understand set of quantitative tests. The selection system is entirely quantitative, setting aside all personal biases and views, looking at the universe in a purely objective way.
Morningstar Rating Allianz Technology Trust has a 5 star rating with Morningstar. This is a risk-adjusted, cost-adjusted comparison of fund performance within fund categories. The underlying methodology is robust and accounts for periods of volatility-downward volatility in particular-and also adjusts for fund expenses, including sales charges. That means the more expensive the fund is, the harder it will be for the fund to earn a high star rating.
A ranking, a rating or an award provides no indicator of future performance and is not constant over time.
Morningstar star rating © 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.